Currency
Uruguayan Peso (UYU)
EOR IN Uruguay
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A guide to employing and growing your team in Uruguay
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Uruguay is a democratic constitutional republic that boasts the 12th largest GDP in the Latin Americas, unrivalled levels of democratic freedom, press freedom, political stability, and economic equality. Uruguay’s labor market is heavily regulated and centers on strong worker protections. Employment is governed by the Uruguayan Labor Code and the Banco de Previsión Social (BPS). A standout feature is the “Aguinaldo” (13th-month salary), which is paid in two halves (June and December). As of 2026, the National Minimum Wage is approximately UYU 21,106 per month.
Employer Contributions
Pension Fund contribution: 7.5%
Health Insurance contribution: 5.0%
Labor Re-conversion Fund (FRL): 0.1%
Labour Credit Guarantee Fund: 0.025%
Work Accident Insurance (BSE): Varies by industry risk (typically 1% – 5%).
Total Employer Contribution: ~12.625% – 17.625%
Employee Payroll Taxes
Pension Fund contribution: 15.0%
Health Insurance contribution: 3.0% – 8.0% (Based on income and family status).
Labor Re-conversion Fund (FRL): 0.1%
Total Employee Contribution: 18.1% – 23.1%
Employee Income Tax Rates
Up to UYU 379,596: 0%
UYU 379,596 – UYU 542,280: 10%
UYU 542,280 – UYU 813,420: 15%
UYU 813,420 – UYU 1,626,840: 24%
UYU 1,626,840 – UYU 2,711,400: 25%
UYU 2,711,400 – UYU 4,067,100: 27%
UYU 4,067,100 – UYU 6,236,220: 31%
Over UYU 6,236,220: 36%
Statutory Leave
Employees are entitled to 20 days of paid annual leave after one year of service. A unique benefit is the Vacation Salary (Suma para el mejor goce de la licencia), which is an additional 100% of the net daily wage paid to the employee before they take their leave. Uruguay observes 12 public holidays, 5 of which are “non-movable” and mandatory paid days.
Pregnancy and Maternity Leave
Female employees in Uruguay are entitled to 14 weeks (98 days) of fully paid maternity leave, typically split as 6 weeks before the birth and 8 weeks after. The Social Security Bank (BPS) covers 100% of the salary during this period. Furthermore, once the mother returns to work, she is entitled to “nursing hours,” which usually consist of two half-hour breaks per day, and many companies allow a reduced 4-hour workday (half-time) for the first six months after the baby’s birth under the Parental Care Subsidy.
Paternity Leave
As of January 1, 2026, the duration of paternity leave for private-sector employees has been extended to 20 consecutive days. This leave is mandatory and non-renounceable. The first 3 days are traditionally paid by the employer, while the remaining 17 days are subsidized by the BPS. Additionally, workers benefit from a 30-day stability period following their return; if dismissed during this window without gross misconduct, the employer must pay a special severance of three salaries.
Work-Related Injury Leave
Sick Leave: The employer generally pays for the first 3 days. From the 4th day onward, the BPS provides a subsidy equal to 70% of the salary for up to 12 months.
Marriage Leave: 3 consecutive days of paid leave.
Study Leave: Up to 6 to 12 days per year for students, depending on their weekly hours.
Termination Process
Employers can terminate “at-will” but must pay Severance Pay (Indemnización por Despido) unless “gross misconduct” (notoria mala conducta) is proven. Severance is calculated as one month’s salary for every year worked, capped at a maximum of 6 months.
Notice Period
While there is no strict statutory “notice period” duration defined for indefinite contracts, the common practice is to provide 1.5 weeks of notice. If notice is not given, the employer simply proceeds with the severance payment on the date of termination.
Probation Period
A probation period is not mandatory but is standard practice, typically lasting 3 months. During this window, either party can terminate the relationship with much higher flexibility, though the employee still accrues the proportional 13th-month salary and vacation days.